Jordan, Lebanon and Syria Business Forecast Report Q4 2008

Publication Date	August 2008
Publisher	Business Monitor
Product Type	Report
Pages	66
ISBN Number	1745-0616
Product Code	BMI02401

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Summary

Times A-Changing (Again)

Nothing stays still for long in the Middle East, and the latter half of 2008 sees Lebanon installing a new government, Syria on the verge of an apparent breakthrough in its relationship with Israel and Jordan in landmark meetings (separately) with both Iraq and Hamas. Economically, none of the three countries is a disaster zone, although Jordan is a clear frontrunner in terms of stability. Lebanon and Syria could easily overtake their neighbour, with huge growth potential if political progress is made, but this is by no means guaranteed. Lower oil prices will take the pressure off all three, though, and we expect inflationary pressures to ease throughout the region.

We have not significantly altered our forecasts for GDP growth since our last quarterly report, and we expect real GDP growth to hit 5.7% in 2008, down slightly from 5.9% in 2007. Although growth will gradually slow over the forecast period, in 2012 it will still record a solid 4.1% increase. The coming years could potentially see a large escalation in investment if the government's plans to build up a domestic oil industry are realised, and the government continues to prove its mettle as far as fiscal policy is concerned. Politically, Jordan continues to be buffeted between various regional conflicts, but should maintain the delicate stability it has seen over recent years. A US/Israeli strike on Iran could upset the balance somewhat.

For Lebanon, the outlook is much improved compared with last quarter: we now see real GDP growth coming in at 4.5% this year, compared with 4.0% last year (according to official reports), before slowing back to 4.0% in 2010-11, and 3.0% in 2012. Although this is a substantial improvement on our previous forecasts, this is still not our best case scenario for Lebanon: for a state which is recovering from decades of stagnation and is supported by billions of dollars of aid and loans, Lebanon could be growing a lot faster. Our main concern stems from the fact that this government is only transitory: we see strong potential for a deterioration in the political scene as we move towards the April elections.

Perhaps the most dramatic development has been in Syria, where it has become clear that a rapprochement with Israel is now a real possibility, in line with the view we have been expressing for at least two years. We think this is more than possible over the next five years, but have not factored it into our GDP growth forecasts. Improved relations with the West would see an uptick in foreign investment and trade, taking growth to the 6-7% area, rather than the 4-5% (and falling) that we are currently projecting. However, as always with Syria, there is a huge amount still to be done in terms of the business environment.

Content

Bmi Risk Ratings
- Jordan
- Lebanon
- Syria
- Middle East Ratings League Tables
Executive Summary
- times A-Changing (Again)
Jordan
Chapter 1.1: Political Outlook
- SWOT Analysis
- Foreign Policy
- Emerging Foreign Policy Challenges
- Relations with Iraq Will Continue to Improve, but The Ascendance of Hamas, Hizbullah and Iran Will Keep Jordan
- from Getting Too Comfortable.
- Table: Jordan Political Overview
Chapter 1.2: Economic Outlook
- SWOT Analysis
- Economic Activity
- Growth Slowdown and Increasing Fiscal Prudence
- Real Gdp Growth Will Slow over The Coming Years as Household and Government Consumption Expands Less Rapidly.
- Table: Jordan Economic Activity
- Table: Jordan Macroeconomic Data and Forecasts
Chapter 1.3: Business Environment
- SWOT Analysis
Lebanon
Chapter 2.1: Political Outlook
- SWOT Analysis
- Domestic Politics
- New Government: Key Implications
- Elections Scheduled for April 2009 Could Derail What Is Still Only A Semi-Stable Political Situation in Lebanon,
- and We Expect The Opposition to Increase Its Parliamentary Representation.
- Table: Cabinet Agreed July 2008
- Table: Lebanon Political Overview
Chapter 2.2: Economic Outlook
- SWOT Analysis
- Economic Activity
- Growth Outlook Improved but Still below Potential
- The Outlook Has Brightened Considerably since Our Last Business Forecast Report, and We Have Revised up Our Real
- Gdp Growth Forecasts Accordingly.
- Table: Lebanon Economic Activity
- Balance of Payments
- Trade Deficit Widening, but Overall Bop Position to Improve
- The Current Account Deficit Will Continue to Improve over The Forecast Period, Narrowing to A Much More
- Manageable 3.7% of Gdp in 2012, and Our New Long-Term Forecasts Project A Surplus by 2017.
- Table: Lebanon Balance of Payments
Chapter 2.3: Business Environment
- SWOT Analysis
- Syria
Chapter 3.1: Political Outlook
- SWOT Analysis
- Foreign Policy
- Rapprochement Possible in The Long Term
- While Syria Is Moving along A Path of Rapprochement with The West, Key Obstacles Remain.
- Table: Syria Political Overview
Chapter 3.2: Economic Outlook
- SWOT Analysis
- Economic Activity
- New Challenges Ahead
- Syria Is in for A Broad-Based Economic Slowdown (but Not A Recession), Unless IT Strikes A Peace Deal with Israel,
- Opening The Way for Rapprochement with The International Community.
- Table: Syria Economic Activity
- Balance of Payments
- S-T Food Shock, L-T Oil Sector Decline: Economic Challenges
- A Poor Harvest That Leaves Syria Needing to Import Wheat Supplies Will Negatively Impact The Current Account.
- Table: Syria Balance of Payments
Chapter 3.3: Business Environment
- SWOT Analysis
Chapter 4: Special Report
- Mega-Urban Regions
- Table: The Worlds 30 Largest Urban Agglomerations
- Table: The Worlds Richest Cities in 2020 by Gdp
- Table: The Worlds Fastest Growing Urban Areas by Population
Chapter 5: Bmi Global Assumptions
- Global Outlook
- Table: Global Assumptions
- United States
- Eurozone
- Japan
- China
- Commodities